Charge Cards Definition & Meaning | Financial Term | CSIMarket
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Glossary

Charge Cards

Financial Term

A charge card is a type of credit card that requires the cardholder to pay off the entire balance each month. Unlike traditional credit cards, which allow cardholders to carry a balance from month to month (with interest charges added for the privilege), charge cards require full repayment of the balance by the due date to avoid penalties.

Charge cards are typically marketed to high-income individuals who have a good credit history and can afford to pay off their balance in full each month. These individuals may benefit from the rewards programs that are often associated with charge cards, such as travel points or cash back.

In the financial industry, charge cards are used by banks and other financial institutions as a means of generating revenue through annual fees and merchant interchange fees. Charge cards can also be a tool for managing credit risk, as customers who cannot afford to pay off their balance each month are less likely to be approved for a charge card.

Overall, charge cards are a type of credit product that offers benefits and rewards to individuals who can afford to pay off their balance each month. They can be a useful tool for managing finances and building credit, but must be used responsibly to avoid penalties and fees.


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